A biomass mess (again)

Last week RES, the developers of a 100MW biomass power plant in Northumberland, announced they were scrapping the project.

Unfortunately, I can’t say that I’m too surprised.

Back in July I expressed my confusion, in an article called A Biomass mess, that energy secretary Ed Davey had approved the project.

I was confused because Davey’s approval came just days after the government declared that new dedicated biomass plants would not be welcome in the new contract for difference subsidy for renewables, unless they had a combined heat and power (CHP) element. And any new plants unable to meet the CHP requirement would have to fight over support under the existing renewable obligation (RO) scheme, which the government had capped at 400MW.

So why was Davey days later approving a scheme which, without a CHP offering, only had a realistic chance of being developed if it beat off competition from a (then) estimated 1GW of projects in development?

Confusion over the government’s position on biomass has apparently proved too much for RES, which after an unnamed partner pulled out of Blyth late last year decided it could no longer move the project forward with the uncertainty over whether it would or would not receive RO support.

Only two projects totalling 73.5MW generating capacity have so far been approved by DECC

RES’ executives are not the only ones to pull the plug on projects. Last October E.ON scrapped its 150MW Portbury Dock project in Bristol, declaring that “under the current regulatory and policy framework” the project “was not a priority investment for E.ON”.

Meanwhile RWE’s 65MW Stallingborough project in Lincolnshire has been put on hold.

In fact, so far only two projects totalling 73.5MW generating capacity have been approved by the Department of Energy and Climate Change (DECC) to receive RO support within the 400MW cap: Eco2’s 42.5MW North Lincs project and E.ON’s 31MW Blackburn Meadows.

Judging from the opinions of those I have spoken to, it would seem that the government’s criteria that a project can only have RO support confirmed once it reaches financial close creates too much uncertainty for projects in the early stages of the development process.

As a result, the only schemes likely to be successful are those that are well progressed and close to agreeing financing terms. Just how many of those biomass projects that are left out there is uncertain – the only project of significant size that I could confirm was still aiming to secure RO support was Helius’ 100MW Avonmouth project, which secured a Treasury debt guarantee last October and is progressing towards financial close.

If this, and perhaps another couple of small projects do go ahead, that will mean the government has managed to successfully reduce a potential 1GW of generating capacity to around 200MW…just what we want at a time when we are told there is real danger of the lights going out.